In the eclectic 21st century, the idea of an opera drawing on sources as diverse as jazz, rock and country music, Indian classical forms, hipster poetry and bursts of blistering free-improv doesn't sound that fanciful a notion. But back in 1970, it was unimaginable – until Carla Bley, the majestically eccentric pianist and composer, conjured up a gargantuan, avant-cinematic, cross-genre venture called Escalator Over the Hill, in the face of record company indifference and no financial support.

But through her sumptuous compositions for jazz orchestras, her charisma and deceptively offhand determination, Bley persuaded an extraordinary cast to collaborate on a venture that ran to three long-playing discs, laboriously assembled from separately recorded parts. This was long before the internet and digital studio technology made such things a breeze. Escalator became the Sgt Pepper of new jazz, or a parallel to Frank Zappa's genre-busting work in the same era – displaying an imagination and breadth that, for all the project's unevenness and periodically exasperating impenetrability, showed aspiring composers that the old sectarianisms in music could be swept away.

Bassist/vocalist Jack Bruce, from the then recently disbanded supergroup Cream, played a key role in the project, as did country singer Linda Ronstadt. Argentinian saxophonist Gato Barbieri, an admirer of Albert Ayler and Pharoah Sanders, plays with blazing intensity and power. Don Cherry, a cornetist with Ornette Coleman, is at his most jubilant, guitarist John McLaughlin is as fierce, bluesy and exciting as he is on the Miles Davis/Jack Johnson sessions recorded around the same time. Escalator had slowly come together in the late-60s, after Carla Bley (the daughter of a church musician) taught herself jazz by listening to the giants of the genre as a club waitress and occasional pianist in 50s New York. She also revealed a distinctive melodic talent as a composer for her first husband, piano virtuoso Paul Bley. In the 60s, her work was increasingly adopted by jazz gurus such as George Russell and Jimmy Giuffre, and her powers as a large-ensemble composer in the Ellington-Mingus-Gil Evans tradition surfaced in work for vibraphonist Gary Burton (A Genuine Tong Funeral, 1967) and bassist Charlie Haden (Liberation Music Orchestra, 1969).

During the latter period, Bley had regularly been receiving poems from Paul Haines, an old friend and fan living in New Mexico and then India. Bley detected a musicality in Haines's writings that the poet hadn't imagined. The poems slowly coalesced into a jigsaw of a libretto. "I would put them on the piano and stare at them for hours," Bley told Time Out in 1972. "Sooner or later certain lines would seem to have a melody to them. Then it would be just a matter of working at it, with the form and rhythm of the lyric leading the way ... the full meaning of the words would not occur to me until I had worked with them for months, sometimes years. Through this process we eventually accumulated about twelve major pieces of music and I started thinking about Escalator over the Hill."

Set in an imaginary run-down hotel and catching the clamour of voices lost in it, Escalator features a rock band led by Jack Bruce (with McLaughlin on guitar) and an eastern group led by Don Cherry, both offering the hotel guests – including Linda Ronstadt as the character Ginger – a way out. "Jack was our Caruso," Bley said in 1972. "He sang the material better than anyone in the world, we couldn't have wanted anything else."

Since then, Carla Bley has won almost every international award and accolade in jazz. Her work is regularly regarded in the same light as giants such as Gil Evans and Duke Ellington. Her writing has spanned non-improvisational chamber music, a group with her current partner and bassist Steve Swallow, and leading European soloists such as saxophonist Andy Sheppard and trumpeter Paolo Fresu. But she's best known for intricate, harmonically lustrous music for orthodox jazz orchestras in which rich chords, lopsided tangos, thumping swing and a good deal of sidelong irony coexist. Bley has remarked that Kurt Weill, Erik Satie and the Beatles have had as strong an influence on her music as Ellington, Russell or Mingus – and it shows.

Bley once recalled a conversation with Swallow about self-doubt. Swallow told her that there may be only 50,000 people on the planet who really appreciated her music, but if that barely gets on the graph by pop-audience standards, who cares? Bley told the Guardian in 1991: "I'd rather have my 50,000 than a bigger audience that wanted me to do something different." Escalator Over the Hill, and all the many representations of Bley's idiosyncratic eloquence since, are enduring proof of her value.